Accounts Receivable has a balance of $32,000, and the Allowance for Bad Debts has a credit balance of $3,000. The allowance method is used. What is the net realizable value of Accounts Receivable before and after a $2,100 account receivable is written off?

Question

Quizplus · Accepted Answer

Writing off an account receivable under the allowance method does not change the net realizable value of accounts receivable. Before the write-off, the net realizable value is Accounts Receivable ($32,000) minus Allowance for Bad Debts ($3,000), which equals $29,000. After the write-off, the specific receivable and the allowance decrease by the same amount, leaving the net realizable value unchanged at $29,000.

Accounts Receivable Has a Balance of $32,000, and the Allowance